All carriers, whether independent truckers or corporations, are required to present and pay taxes according to an annual period of expenses and income. Whether it is the calendar year or the fiscal year, the company must be consistent once it chooses its accounting method. Fiscal years or calendar years are usually 12 consecutive months; but new companies or those that have started their term in the year may have the shortest first accounting year.
Transportation companies generally keep accounting records and have a well-established record so that when the time comes to file their tax return, they present their financial statements, accounts such as the statement of profit and loss (income and expenses) and the balance of its obligations or debts and assets is all available to the company; cash, equipment and accounts receivable. With this information, the company is ready to do its tax preparation before the deadline expires and thus avoid the necessary fines. As can be seen, the companies that use resources to maintain an order and availability of information for the moment in which it is required.
The above concept differs greatly from the registry maintained by independent truckers. Unfortunately, the IRS knows from experience that self-employed people sometimes claim excessive deductions and underreport all of their income. The IRS analyzes and pays special attention to the lack of an accounting record. Based on this analysis, the IRS carefully reviews Form 1040 Schedule C.
The IRS knows that a substantial net loss may be reported there (especially if those losses offset all or part of the income reported on the return). If you want to avoid the wrath of IRS auditors, take a look at your list of expenses you intend to claim. This scenario could attract unwanted attention from the IRS. Reviewing your income and transportation expenses in advance could save you a lot of time and money in the future.
Your audit probability will increase dramatically as your income increases. Sole proprietors who report at least $100,000 of gross income on Schedule C have a higher audit risk.
You have to remember that if you are a company or independent, your calendar year starts from January 1 to December 31, you have to report all your business income and expenses that occurred within that period. There is also the fiscal year, which includes any period other than the calendar year. May this Christmas be one of family union and may the coming new year 2023 come with lots of health and well-being.
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